Philippines stays ahead of China in outsourcing race

Despite China’s sizeable workforce and low labour cost, local experts believe it will take a long time for the country to catch up with the Philippines as a choice destination for business process outsourcing (BPO) services.

These experts said China’s lack of English skills and its low cultural affinity with the U.S.negate its advantage in workforce size and labour cost when competing with the Philippines for BPO projects.

“It’s going to take a lot of time for China to develop good English capabilities and cultural likeness to the U.S.,” claimed Miguel Garcia, managing director of call center Diversified Technology Systems, Inc. “(These) skills are most critical in providing outsourced services.”

‘For his part, Ralf Ellspermann, chief executive officer of Philippine IT Offshore Network, said that “even if China starts teaching English to its high school students, it would be nothing compared to Filipinos who have been trained to speak English even before they enter school.”

These advantages increase the Philippines’ potential as the knowledge-based services industry expands, Ellspermann said. China has traditionally dominated the manufacturing industry which represents 14 per cent of the U.S. economy. On the other hand, the Philippines has laid its stake in the services industry which represents 60 per cent of the U.S. economy.

Although the Philippines is set to become the “eServices Hub of Asia” which includes services in BPO, customer care, technical support, medical transcription and software development, various areas of growth remain constantly present to drive the industry forward.

Aggressiveness in promoting and marketing local IT services worldwide still have to be worked on. Establishing direct contacts in and opening channels among other countries have to be increased, said Ellspermann.

“The Philippines should not be ashamed to say ‘We are here and we want your business’ to foreign clients,” he said. “Outsourcing companies must evidently see the confidence of the Philippines in its people and skills.”

Local service vendors must also continuously prove to clients how well integrated offshore operations are and that knowledge transfer can be completed in a comprehensive and timely fashion. This must be done to efficiently escalate problems from a local point of contact to the offshore back office to make sure that skills and capabilities are current, and guarantee that pricing is up to date, Ellspermann pointed out.

Ellspermann recommended that developments in infrastructure, especially in other local offshore areas like Cebu where several major call center players have already branched out, be given more focus.

Projected annual revenues in the outsourcing industry are predicted to grow to US$100 billion by 2008. The industry is also expected to employ about 100,000 Filipinos, according to Forrester Research.

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Jim Love, Chief Content Officer, IT World Canada

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